08 Jul 2011
Analyst firm Gartner is predicting that businesses will increase spending on software-as-a-service (SaaS) implementations by nearly 21 per cent in 2011, as tight capital budgets force IT leaders to embrace pay-as-you-go computing.
While SaaS has been around for more than a decade, many firms are re-evaluating its potential, said Tom Eid, an analyst at Gartner.
"Initial concerns about security, response time and service availability have diminished for many organisations as SaaS business and computing models have matured and adoption has become more widespread," he said.
The vast bulk of SaaS spending goes on customer relationship management software, such as that produced by Salesforce.com. Gartner predicts that CRM will account for 32 per cent of firms' total spend on SaaS in 2011.
But firms are also turning to SaaS for other functions.
According to Gartner, spending on SaaS-based content, communications and collaborations technology will rise by 18 per cent in 2011.
But firms are still reluctant to purchase SaaS-based enterprise resource planning applications (ERP), Gartner reported. It currently accounts for just seven per cent of total ERP spending and is only set to rise modestly over the coming year.
Gartner’s prediction that businesses will increase spending on SaaS by 20.7% in 2011, underlines the impact that budgetary pressures are having in forcing many organisations to look to a more lean way of consuming applications. It’s expected that the majority of this SaaS spending will go on CRM software and it seems there is still some reluctance to purchase SaaS based ERP solutions.
These figures support the fact that many organisations simply won’t adopt an ‘all or nothing’ approach to the cloud – it’s still seen as too radical a move - and that some mission-sensitive data such as strategic planning information, will remain on premise. This being the case, one of the key challenges for businesses will be to learn how to effectively balance on- and off-premise deployments, and how to better integrate their cloud applications with on-premise applications to get the most value from their overall mix. Getting this right - so that these applications communicate effectively with each other - will be the key to a successful hybrid model.
Posted by: David Akka, UK MD, Magic Software 08 Jul 2011
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